Quote:
Originally Posted by Scucca  Its a major empirical exercise to measure underpayment and therefore there is little data available. We do have more specific analysis. For example, Hofler and Murphy sparked off the stochastic frontier approach in the 1990s. This essentially measures underpayment by including a one-sided error in the regression model. This is used to capture the impact of workers adopting a reservation wage strategy. They find that 'worker wages fall short of worker potential wages by approximately 10 percent'. However, its a technique designed to assess the impact of job search frictions and does not capture underpayment generated by wage norms.
So why does the US have such a high proportion of low skilled labour? I fear you're too focused on supply-side issues and not fully recognising the demand-side problems (and therefore the relatively unimportance of the individual worker's behaviour) |
I think the following link will help explain that. It's stating word for word that the "labor market is not-as classical labor market theory depicts it-a single unified market in which each worker is paid according to his/her additional value to the firm and is promoted to better-paid positions as that value increases. Rather, it has two largely separate sectors-a primary sector, which functions more or less as classical theory depicts and a secondary sector, which has few ladders to job advancement, little job stability, and more gender and racial discrimination than the primary market"
http://www.urban.org/publications/309642.html
Which makes perfect sense because how do you explain upward mobility? In the U.S. from my experience it's done through working, on the job experience as well as through an education. For example: How does the Vietnamese immigrant start a business after being in the U.S. a few years, or how does the illegal immigrant drive a decent SUV after being here a few years? I standby my assumption that immigrants work harder and if we had the same work ethic (which a lot of us do) we would be fine?
However if you want to lump all underpayed workers, part time workers, the whole deal basically, well then of course you may have a leg to stand on factoring all of that, but by and large the opportunities are there in the U.S. and it's not a major problem in my opinion.